Warsh, Trump's Fed Chair Pick, Moves Closer To Confirmation

The Senate Banking Committee on Wednesday voted 13-11 to advance Kevin Warsh’s nomination to chair the Federal Reserve board, bringing him a step closer to replacing Jerome Powell atop the central bank next month.

Warsh cleared the panel in a party-line vote after the Justice Department agreed to defer to the Fed’s inspector general on an investigation of the central bank’s headquarters renovations, opening the way for Sen. Thom Tillis (R-N.C.) to end his blockade of Fed nominees. Tillis had criticized the DOJ probe as an attempt to undermine central bank independence.

All Democrats on the committee voted no by proxy, except Sen. Raphael Warnock of Georgia, who voted against the nomination in person.

President Donald Trump has threatened to fire Powell, who has not lowered interest rates as sharply as the president wants, and he has attempted to fire another Fed board member, Lisa Cook. The Supreme Court has allowed Cook to stay in her role while justices deliberate over whether Trump has grounds to remove her “for cause,” a decision that will come shortly. The president claims that she committed mortgage fraud, but that underlying allegation has not been litigated.

The outcome of that case will have huge implications for Trump’s leverage over Warsh if he is confirmed.

Warsh previously served as a central bank governor, including during the 2008 financial crisis. He has generally called for lower interest rates but has not committed to doing so and says Trump never asked him to.

Still, his nomination has sparked concern among Democrats that he will fail to maintain the central bank's independence.

In remarks before the vote, Sen. Elizabeth Warren (D-Mass.) argued that the meeting should have been postponed, pointing to statements from the president and Press Secretary Karoline Leavitt suggesting the headquarters probe is not over.

“I understand wanting to believe that there is finally an end to the president’s demands to take over the Fed, but no one is fooled,” she said. “Trump is still going after control of the Fed, and he is keeping the threat of bogus criminal charges alive until he gets what he wants.”

Tillis disagreed, thanking the DOJ for working to reassure him. He said the office of U.S. Attorney Jeanine Pirro, which was leading the investigation, planned to appeal a court ruling quashing subpoenas to the Fed but that they did not intend to use that appeal to reopen the probe into Powell and the Fed.

“It’s no secret that the reason Mr. Warsh’s nomination could have been held up is because of my concern with the investigation,” he said. “I want to thank the Department of Justice for the assurances that they gave me.”

“I’ve got confidence that this investigation is over,” he added, calling the Fed’s inspector general, Michael Horowitz, one of the best watchdogs in the government. Horowitz, who began an investigation into the central bank’s headquarters at Powell’s request last summer, can make a recommendation to the DOJ if he finds evidence of criminal activity.

The Fed’s rate-setting committee will meet later today, where officials are expected to hold rates steady. Afterward, Powell will hold what's likely to be his last press conference as chair.